China’s Slowdown Tarnishes Economic Boom in Copper-Rich Zambia

NDOLA, Zambia — Pulling up in his white Mercedes S.U.V., Liu Youbin shouted over the din of the construction site where Chinese supervisors in red uniforms and helmets watched over a couple of dozen Zambian workers. He vaunted the speed of Chinese construction crews, later handing out a pamphlet that read, “Dollar Hill Shopping Mall, Wholesale City & Amusement Park. Coming Soon!!!”

But for all the frenetic activity, Mr. Liu could not hide his pessimism. Plans for the mall here were drafted five years ago, he said, when Zambia’s economy was roaring.

“Before, everything was great,” he said. “Now, we lose money every day.”

For more than a decade, this mineral-rich nation in Southern Africa offered prime evidence of the continent’s rise, its soaring economy propelled by China’s seemingly insatiable appetite for its copper. Deepening ties brought new roads, hospitals, stadiums, all built by the Chinese, most completed ahead of schedule.

But China’s economic slowdown has caused Zambia’s economy to tumble. Thousands of jobs have been lost, and the outlook is now so grim that Zambia recently held a national day of prayer to revive its currency, one of the world’s worst performers this year.

The emergence of a new consumer class across Africa in the past decade, as well as growth and investment in the service sector, fueled hopes of sustained economic expansion on the continent. But the quick downturn in recent months in many of Africa’s fastest-growing economies suggests how much of the impressive growth in the past decade and a half was still driven by a boom in commodities — one supercharged by China.

Now, China’s demand for raw materials has cooled, as it tries to shift its economy away from construction, investment and exports to one driven by consumption and services. That transformation is already jolting countries in Africa, from those with diversified economies, like South Africa, to those dependent on a single export, like Zambia or Angola, even as the Chinese government and businesses express long-term commitment to the continent.

The Chinese president, Xi Jinping, arrived in South Africa on Wednesday for a visit that will include a two-day diplomatic summit meeting, the China-Africa forum, the sixth such event since 2000.

In a sign that China is moving beyond its focus on Africa’s raw materials — and perhaps in response to critics who say that the benefits to Africa from that focus have been limited — Mr. Xi is expected to announce plans to help bolster industrialization and manufacturing.

Chinese businesses are still investing in Zambia and elsewhere. South Africa recently said that China had pledged $50 billion to help it industrialize, including the deployment of 200,000 Chinese industrial managers to train locals.

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The construction site of the Dollar Hill Shopping Mall in Ndola, which is being built by a Chinese company. Plans for the mall were drafted five years ago, when Zambia’s economy was roaring.CreditJoao Silva/The New York Times

“It’s going to be interesting to see how much capacity, strength or will China has toward Africa during this period,” said Ross Anthony, the acting director of the Center for Chinese Studies at Stellenbosch University in South Africa. “If they play it right and show commitment irrespective of their own domestic issues, that could really cement relations between China and Africa, because there are many people in Africa that are still sitting on the fence.”

Here in the Copperbelt of Zambia, two mines have closed in recent weeks, after their owners blamed the low price of copper and Zambia’s worsening electricity shortages for rendering their businesses unprofitable. Six thousand workers have lost their jobs. But the shock was compounded by the fact that one of the mines had a Chinese owner, the China Nonferrous Metals Company.

“People expected China, or Chinese companies, to be the last to retrench workers,” said Godfrey Hampwaye, an economic geographer at the University of Zambia and an expert on relations between China and African countries. “People thought China was Africa’s best friend.”

Zambia’s president, Edgar Lungu, who faces an election next year, recently spent five days touring the Copperbelt in an attempt to assuage rising anger, but he was often met with jeers.

China surpassed the United States in 2009 as Africa’s biggest trading partner. But as its demand for commodities has diminished — helping to bring down the worldwide prices of everything from copper, iron ore and oil to coal, diamonds and gold — many other African governments are confronting yawning holes in their budgets.

Some previously high-flying, commodity-dependent countries, like Zambia, Angola and Ghana, have borrowed heavily from international creditors in recent months to raise badly needed cash. With creditors now demanding higher interest rates, the debt load of some African nations has started to increase, a decade after the debts of many African countries were written off.

The continent’s two biggest economies, Nigeria and South Africa, are slowing down, contributing to what the International Monetary Fund said would be 3.75 percent growth in sub-Saharan Africa in 2015, the slowest rate since 2009.

In some nations that sell commodities to China — including Angola, the Democratic Republic of Congo and the Republic of Congo — authoritarian governments with shrinking resources to quiet political challengers are responding with increasing force.

Here in Zambia, as well as in many other African nations, there are few signs that governments used the profits from the commodities boom to diversify their economies and to make them less dependent on foreign investors and less subject to cycles of boom and bust. Copper, which makes up more than 70 percent of Zambia’s exports, is now worth less than half of its peak price just a few years ago.

“The time for reckoning has come because we have been putting all our eggs in one basket,” said Nkole Chishimba, the president of the Zambia Congress of Trade Unions, the country’s largest labor umbrella organization. “Zambia, since independence in 1964, has talked about the need to diversify beyond copper, and we have just missed another great opportunity to do that.”

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Richard Zhang, an owner of China Copper Mines in Chingola, compared Africa's current economic situation to China's in 1982, when he began working in the copper industry, a few years after China embraced market policies.CreditJoao Silva/The New York Times

Zambia could have used revenues from the copper boom to develop other areas, like agriculture and tourism, Mr. Chishimba and others said.

Some Chinese here say they will keep doing business as Zambia rides out its current slump.

“Long-term, this place is still a good investment,” said Mr. Liu, 35, the businessman behind the new shopping center here, near the Levy Mwanawasa Stadium, one of two stadiums that China has built in Zambia.

His family, which is from Fujian Province, founded Mei-Mei Zambia Limited about eight years ago as a manufacturer of concrete blocks, and is expanding its business by building the shopping center.

Many Chinese noted that China’s engagement with Zambia dated back to Mao Zedong, under whom China built a railway linking Zambia and Tanzania in the mid-1970s, a huge project that still earns China good will on the continent.

That history, and the business opportunities here, still draw Chinese like Yu Qi, 26, a physician from Jiangxi Province. After completing his residency, Mr. Yu said, he joined his large family in Zambia, where he helps manage a copper mine in Chingola, about 100 miles northwest of here.

“Zambia’s full of opportunity,” he said.

An uncle, he explained, had stayed in Zambia after completing a government project two decades ago. He founded a company that now has several divisions and employs 10 family members, including Mr. Yu, who runs China Copper Mines in Chingola.

One of the mine’s owners, Richard Zhang, 54, began working in the copper industry in Jiangxi Province in 1982, just a few years after China embraced market policies.

“Twenty or 30 years ago, China was also very poor, even poorer than this stage of Africa,” Mr. Zhang said. “After we bring these new ideas and technology to Africa, maybe after 20 or 30 years, Africa can maybe surpass China. I would be happy to see that.”

From the early stages of China’s economic modernization, the government ensured that Western and Japanese companies seeking to do business in China, including in the copper industry in Jiangxi, transferred skills and technology.

But Zambia and other African nations appear to have failed to benefit broadly from the commodities boom, whether by not negotiating better terms with Chinese companies, not insisting on technology transfers or not using the revenues from raw materials to diversify their economies.

“We have to look inwards as sub-Saharan Africa,” said Kryticous Nshindano, the executive director of the Civil Society for Poverty Reduction Zambia, a good-government organization. “Is it an issue of leadership, institutions, corruption? We know what we’re supposed to do, but why are we not doing what we’re supposed to do?”

A version of this article appears in print on , on Page A10 of the New York edition with the headline: Zambia’s Economy, Driven by Copper, Tumbles as Chinese Demand Cools . Order Reprints | Today’s Paper | Subscribe